Chinese Firm Complains That North Korea 'Cheated' Them Out Of Millions Of Dollars

kim jong un

Photo: (AP Photo/Korean Central News Agency via Korea News Service)

China has long been North Korea’s economic ally, and it appears that both parties want to strengthen that relationship. North Korean exports to China surged 40% in the first quarter of 2012, and the two countries signed a special trade deal earlier this summer. Unfortunately, a recent economic spat suggest that their may be cracks forming in the blossoming relationship.Last month the Chinese firm Xiyang Group openly called their 4 year long North Korean “a nightmare”, the AP reports. The company posted a 4,000 word statement to their Sina blog account in which they described how they they had spent $37.1 million on a joint venture, helping to build an iron-ore mining facility and sending 100 workers to the country. According to Xiyang, their North Korean partners later demanded changes to the contract, and when they were refused the plant was closed and the workers deported. Other reports suggest the company lost $55.3 million from the venture.

The North Korea state, however, refused to take the criticism lying down, and, in an unusual move, responded to the controversy. On Wednesday the state-run news agency KNCA released an article titled “Media Should Maintain Impartiality in Report about DPRK“. The article said that Xiyang Group had completed “only 50 per cent of its investment obligations” and that “the Group is chiefly to blame from the legal point of view”.

While the Chinese government has moved to calm the spat, Xiyang is refusing to keep quiet about the dispute. On Thursday, Wu Xisheng, vice general manager of the Xiyang Group, spoke to the Chinese newspaper Global Times about the project and its failure. Wu claimed that Xiyang is just one of dozens of Chinese companies being scammed by North Korea, and added that North Korea should repay its debt to Xiyang, or it will reveal “how Pyongyang cheated it.”

Experts believe the incident may well dent Chinese investors confidence in doing business with Pyongyang — one expert described it as being like a “tsunami” for economic relations between the countries. Then again, the belief that North Korea may be sitting on $6 trillion-worth of rare minerals may prove to be enough incentive.

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